The cost of labor has a major impact on a retailer’s bottom line; in fact it consumes 50 to 60 percent of every organization’s operational cost. Through research, Deloitte found organizations with a large hourly workforce — such as retail — are overspending an average of $30 million on labor costs annually.

Late last year, Chipotle’s 2018 and 2019 earnings were slashed by Bank of America in part because, “We believe further gains from trimming hours will prove difficult which limits the opportunity to get labor below 27 percent of sales even if traffic recovers.” But, what are the causes of overspend, where are they hiding, and why hasn’t this issue been addressed before?

William Cleary, talent acquisition practice leader and LaborWise Advisor, Deloitte Consulting LLP, took time recently to share his advice on how retailers can avoid the same fate Chipotle suffered last year by answering questions about hiring best practices, mixing new technologies into the hiring process, and more.

RETAIL EXECUTIVE: How can existing employees best be leveraged when hiring new employees?

CLEARY: Existing employees serve as a great go-to-market channel for attracting candidates. Current employees engage constantly with potential candidates on social media through posts and comments about their workplace, colleagues, and work satisfaction. Candidates can get a solid feel for a given work environment simply by following several employees on their favorite social media site. With 48 percent of employees utilizing social media to find their most recent job, social media is no longer just for early adopters. This unprecedented level of access to all types of organizations heightens the need to focus on engaging current employees to support recruiting efforts.

RETAIL EXECUTIVE: How can mobile devices be utilized to streamline the application process?

CLEARY: With 77 percent of job seekers searching on mobile phones, leveraging mobile effectively is no longer optional for high-performing talent acquisition functions. Candidates must be able to find, complete, submit, and view the status of an application online. Most talent acquisition technologies are mobile enabled. Leading technologies focus on the mobile UX and UI, specifically designing their technology to meet the needs of a mobile device user. Updating hiring processes to complement and leverage these technologies can enable organizations to allow candidates to work on an application where and when it is convenient to them. Ultimately, this can increase the conversion percentage of those moving from searchers to applicants.

"When organizations are able to fully utilize technologies, such as gamification of pre-hire assessments, video interviewing, and AI chatbots, they minimize the risk of losing good candidates during the process."

RETAIL EXECUTIVE: What can be done to automate the prescreening process?

CLEARY: As organizations better understand the skills, capabilities, and competencies that make an employee successful, they can compare these desired traits to the candidate’s profile and understand where gaps exist. Using new cognitive technologies, organizations can follow up in an automated fashion to obtain more details for the hiring manager and recruiter who are ultimately responsible for making a decision about whom to interview.

For example, AI can scan a candidate’s resume and identify a gap in a candidate’s work experience, such as a perceived lack of leadership experience. A pre-designed, automated message can then be sent to the employee asking them to share a story about a time they demonstrated leadership in the face of challenging conditions. Without human involvement, AI-enabled technologies cannot only perform initial candidates’ assessments, but can also follow up to gain a better understanding of specific qualifications.

As these products continue to mature, their ability to extract desired information from a candidate will only become more efficient and effective. An additional benefit to leveraging AI-enabled, automated matching technology in the prescreening process is that it can help eliminate human bias by matching a candidate’s characteristics with those of a previously successful employee without making judgments about other attributes of the candidate.

RETAIL EXECUTIVE: What improvements can be made to the interview process?

CLEARY: In retail, we are seeing a variety of interview approaches that still anchor on traditional methods of interviewing for behavioral and schedule fit, as well as competency of the individual.

Interviewing hourly candidates is all about speed; once candidates meet the basic qualifications, they must be hired as quickly as possible. This sense of urgency is even more extreme for e-fulfillment centers, which require greater numbers of staff and less customer interaction. Seasonal hiring also requires agility and speed so employers can gauge whether their hiring is going to meet seasonal demand.

Every minute a candidate spends waiting for an offer is a minute competitors have to send them their own offer. In the interview process for salaried workers, there is additional opportunity to raise the bar on talent and talent agility. Interviewers should be trained to interview to look not only for this job but also the next.

For example, when evaluating a candidate for a product manager role, their potential for success as a product director should not be overlooked. Interviewers will require guidance from the Talent Acquisition function to learn to judge qualities such as the agility of the individual, their ability to reinvent themselves, and their appetite to evolve as the business evolves. Looking for potential in an interview requires a shift in focus from, “What can you do for me today?” to, “What can you do for my business in 10 years?” Organizations that can bring disciplines from talent management and succession planning into their interviewing practices will be well-positioned for long-term talent advantages.

RETAIL EXECUTIVE: What processes can be streamlined to speed up the hiring of hourly workers?

CLEARY: Many aspects of the hiring process can be streamlined to help fill hourly roles quickly. In the initial application stage, focusing only on collecting information that’s truly required can yield time savings for both the applicant and the hiring manager or recruiter reading the application. Too often, applicants are asked to detail their entire working lives, going back far more years than the recruiter cares to read, and the process lags as a result.

In addition to focusing the information requested of applicants, organizations can leverage technology available in today’s market to do some automated screening work to complement the recruiter’s information. Automated screening can, for example, follow up to collect missing information or ask clarifying questions about contradictory information. Automated technologies can reply immediately upon a submission from the candidate, significantly reducing the time that builds as the application awaits recruiter action.

RETAIL EXECUTIVE: What are the benefits of implementing an applicant tracking system?

CLEARY: The applicant tracking system (ATS) is the traditional way of tracking candidates through hiring steps and statuses. It is often referred to as the heart of the talent acquisition technology ecosystem. New technologies continue to emerge to support components of recruiting such as sourcing and screening, and most are designed to be easily integrated with an organization’s existing ATS. However, these technologies are complementary to a core ATS, not supplemental. Without the ATS first in place, organizations are poorly positioned to leverage these emerging technologies, which aim to enhance the candidate’s experience and optimize stages of the recruiting process.

"To minimize the risks of hiring, organizations should recognize that schedules matter and that new hires experience an unwritten social contract during the hiring process that sets their expectations about what their work schedules and hours will be like."

CLEARY: There will always be inherent risks in hiring: the risk of hiring the wrong candidate, the risk of a competitor making a better offer, the risk of the process being so long and cumbersome that the candidate loses interest, or the risk the scheduled hours do not meet the worker’s expectations. Effective talent acquisition organizations take proactive measures to mitigate these risks, reducing the likelihood of losing candidates to a slow process or of a new hire leaving after just a few months.

First, leading organizations create a robust strategy that is revisited on a bi-annual basis and reacts to market trends and demands. So, when the talent market is tight, they fl ex and look for ways to streamline the process further in order to get candidates through the process more quickly. These organizations also create clarity in their recruiting processes for hiring managers, executives, recruiters and, most importantly, candidates. Clarity leads to fewer questions, which slow down the process, and helps to manage expectations for all parties.

Organizations that aspire to hire great candidates must focus on the candidate’s experience and deliver high-impact moments that matter. Today, technology can help to enable this type of experience, but even the best technologies require the right people, policies, and processes in order to fully realize their value proposition. When organizations are able to fully utilize technologies, such as gamification of pre-hire assessments, video interviewing, and AI chatbots, they minimize the risk of losing good candidates during the process.

Second, schedules matter to recruits and new hires. To minimize the risks of hiring, organizations should recognize that schedules matter and that new hires experience an unwritten social contract during the hiring process that sets their expectations about what their work schedules and hours will be like. This translates into more than work-life balance. The hours translate into the employee’s ability to make the income they expect and gain new skills.

The need to deliver good schedules to all workers is so important Deloitte developed a proprietary software product, LaborWise™, which measures “schedule equilibrium.” Employers can analyze how predictable, stable, and adequate an employee’s schedule and hours are and whether that is driving retention. When scores are good, a strong schedule equilibrium score can be a factor in recruiting. The risk of turnover is lower when the social contract is honored after the interviews and every day the employee shows up for work. An employer who delivers good schedules can brand the organization as one that values its hourly workers.

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